From the AFR:
The risk of a collapse in the Australian housing market will be more than offset by a third wave of growth from the health, education, infrastructure and tourism sectors according to Colonial First State.
At a lunch in Melbourne on Wednesday, Colonial First State Asset Global Management (CFSGAM) argued that pessimism surrounding growth was overdone and that economy was well placed to handle any challenges.
“Three per cent global growth is not a disaster but it’s not fantastic and it’s less than the pre GFC four per cent. Three per cent global growth has been enough to bring down the unemployment rate everywhere” he said.
…Infrastructure spending was no longer concentrated in NSW as it had been traditionally, drifting north to Queensland and south to Victoria. Australia was now the third most popular destination for international students behind the US and the UK.
…Wilson likened the Australian share market to a hotel buffet where the key to getting the best return on your money was “not to fill up on the bread rolls” and concentrate on high value companies with specific value propositions.
Aristocrat, Brambles, CSL, Fortescue, IAG, Macquarie and Stockland were among the smorgasbord of opportunities identified by the team at CFSGAM as having good management teams and bright prospects for investors looking for new ideas.
MB has already acknowledged that the fiscal spike underway will support growth over the next year. That’s old news. But if these chaps believe that Australian domestic demand is in such great shape then I can only ask why are their stock picks nearly all about external demand. CSL, FMG, BRB, MQG and ALL are all stocks whose earnings will depend much more on global growth than Australian and, moreover, will benefit or be damaged by the direction of the dollar, which will only fall if domestic demand remains weak. Only SGP is local and even it might cast as an externally exposed stock given its reliance upon ‘citizenship exports’.
Colonial First State’s stock picks are the complete opposite to their rhetoric and send one clear message: get your money out of Australia.
Which means they either have no idea what they are doing or they are smiling for the cameras.
